The Five Buck Idea

Face it, startups are cool. Anyone that made it through the 90s remembers that startups were cool back then. Well guess what? They are even cooler now. So, how do you get in on the game? Let’s set the stage by thinking back to the atmosphere of the late 90s…

Maybe you were in graduate school making $1000/mo with no health insurance, working on some project that you thought was cool about two years ago. Some tiny niche problem in data visualization or graph theory that three people in the world understood and even fewer cared about. You relished the intellectual pursuit — hell, you were basically getting paid to sit around and play Diablo.

But you also remember all your other friends that graduated with a BS in whatever from your school. They were all tooling around Silicon Valley in BMW convertibles, having lunch with venture capitalists from Price Waterhouse Coopers, going to networking socials, hopping from one hot startup to another, and bagging either stock options or venture funds for doing basically no perceptable work other than running their mouths about some idea that was even lamer than your dissertation project.

Ah, the good old days. Well now’s your chance to take all that regret that has been burning a hole in your gut for the past 10 years and turn it into Internet Gold.

That’s right. You, too, can have a startup. All you need is a five buck idea. And then all that glamour can be yours. So, how do you usher in the age of sex, drugs, and rock and roll? Read on.

Like Paul Graham says, it’s really all in the idea. The simpler, the better. I’d say, if you can say the idea out loud in less than 10 seconds, and the person you’re telling basically says something like, “yeah, that sounds good, but hasn’t someone already done that”, or, “yeah, I like it, but can you make a company out of that”, or my favorite, “yeah, cool, but can you actually make money with that”, then you’re probably in good shape.

You aren’t looking to build a service that solves world hunger, or manages the schedules of entire companies, or does anything really that complicated sounding. You want something simple, almost to the point of ridiculousness, and heck, worth probably about five dollars. Extra points if someone under 20 scoffs and says, “Shit man, I can code that up in a weekend.”

You don’t want an idea that your mom would be proud to tell her friends about (my son works with lasers). You want something that your parents kind of shrug and say something like, “why’d we send him to college?” to each other when you aren’t listening.

Once you have this idea, the only trick is getting it out there and doing a good implementation. That’s where the sweat and tears come in. But never fear, because it’s just a five buck idea. Don’t lose sight of that. It’s not that hard. It’s not that complicated. And it certainly shouldn’t be mind-bending to use.

Get it out there, and get people to use it. Don’t charge money. Don’t make it exclusive. Don’t put in more than a handful of features (more on that some other time). Don’t assume anything about your users.

Don’t have a business plan. Don’t figure out how to make money. Don’t care about your competitors. Just give your users the simplest, purest, uncut, and unfiltered version of your five buck idea. And give it to them now. You want users. You want a community. You want to make it hard for people to not use it. This will not happen overnight.

At the worst, you end up with a moderately useful web site or internet-based service that you can be proud of that really only costs you like $10/mo in hosting fees. At the best, you get acquired for real money. Are you going to get rich as hell? Probably not. But there’s a chance. And, you will have left your mark on the internet landscape.

And why? Because the “big companies” don’t have your agility. You can bang something together in well under a year (remember, you’re not building something really complicated), and you don’t have any corporate baggage to bear. You don’t have to ask anyone. You don’t have to clear it with your boss. You don’t have to file any TPS reports. You are your own boss. You are a startup.

And when you build it, and hopefully they come, you have eyeballs. More importantly, you have an entire market. You created that market, and yes, Y!/Google/Ebay will want either your service, your market, your code, your idea, or at the very least, your visitors.

Then the big companies can’t compete because, well, del.icio.us is just the place to go. So they buy it instead and hope to keep the magic flowing.

So get out there. Make something happen. And just maybe, you’ll graduate like these companies did.

($??) craigslist

Ebay bought a 25% chunk of craigslist. Don’t know how much. The sale was indirect, ie. through some guy that Craig gave “symbolic” shares to. This is definitely a five buck idea. Make a mailing list-like thing and make it free? Add some classifieds and spread the love. Done. Craig, you are a good man.

Yahoo! buys some photos. Even though it has its own photo thingy, Y! gets crazy and buys Flickr. Guesses put it at $15M-ish. Fifteen? Nah. Five. Bucks.

($1M+) Ignite Logic

Google buys Ignite Logic (use bugmenot.com). This was a more quiet acquisition that went mostly unnoticed. Apparently, Ignite was a company that let law firms easily and quickly put together fancy-looking web pages. What do you want to bet this is the code base for Google Page Creator? You heard it here first. A little less flashy than the previous five buck ideas, but a five buck idea nonetheless.

($?) MeasureMap

Google buys a blog traffic analyzing tool. Hot on the heels of the Urchin (Google Analytics) purchase, looks like Google wants to know more about how people are surfing the web. This time, they are targeting software that analyzes blogs particularly well. Traffic analyzing software? Yup. Five bucks. Maybe a bit more for use of the sparklines.

Wow. Five Hundred Eighty Million. Meeellliiioooon. Say it with me. That’s an official ass-load of cash for what amounts to a gazillion wannabe amateur porn stars and a half-bajillion wannabe rock stars. Fox seriously bought the place animated GIFs go to die. Five Eight Oh. Million. Wait for it…. five bucks. Yup. Five.

($415M) Rent.com

Ebay goes crazy again and spends big cash to get into the rental properties market. Pretty darn good idea: matching up renters with landlords. Did I say pretty good? You know I meant five bucks good.

($2.6B) Skype

And the baller award goes to…. you guessed it — eBay. Shelling out a few billion dollar bills to get Skype? That’s cool. The technology? Not so cool. Only about five bucks cool. Take the existing idea of IP telephony that has been done to death, but do it right. Put a nice interface on it, brand it as super-instant-messaging, give it great logos and a smart web page, and hell, make it work over port 80 to get around silly routers. Blammo. Five bucks turns into a couple billion. This five bucker is a bit heavy-hitting in the codebase department, I’ll acknowledge. But still. Five buck idea. Fits the bill in all the ways outlined above.

($?) Upcoming.org

Social network + calendar == Yahoo! wants it. Too bad this comes in after Skype, because it just doesn’t look as impressive. Oh well. Still five-buck worthy.

So, are any of these ideas ground-shaking? Not really. But they were done nicely and they created a market where there was none before.

36 Responses to "The Five Buck Idea"

The above post contains so much useful information that it should be required reading. While it’s focused on internet/software business, it applies in many ways to biotech. A lot of biotech startups make the mistake of trying to develop a very powerful, feature-rich product that is designed to revolutionize a market. Then, due to its design complexity, it takes years to actually make the product perform as specified and to deliver upon all the promises made to the early adopters. There are many, many examples of startups that fail for this reason. Geoffrey Moore’s series of books (such as crossing the Chasm and Inside the Tornado) discuss focusing on one particular market and making a simple product that satisfies a need for the people in that market. This is a more realistic way to quickly develop a product that people actually want. After that success, you can then add/change individual features to gain access to either ancillary markets or larger markets (i.e. horizontal or vertical expansion.) This model is exactly what Mark is ultimately getting at, and it works extremely well for internet-based services. Do something right, but something that be quickly and easily and can still be right. Satisfy the users–make it cool, fun, and interesting. At this point, after what might be just a few weeks of work, you’re about 1-2 years ahead of the average biotech…

Bill, I am glad you put it out in print. Doing a 5 buck idea which you can wrap up and let loose wild in the shortest possible time is akin to turnin off that damn TV and doing some pushups in your living room. It’s fun, it’s necessary, and it leads to bigger things.

Sarcasm vs. honest advice. I wrote it, probably, with a little bit of both in mind. I know of *lots* of teams jumping on the Y Combinator bandwagon, and I have a lot of reservations about that program.

But then again, there seems to be a lot of energy in the “new economy” of web services that link together groups of like-minded people. It’s the same old internet, but how it we thought it would be in 1997.

I don’t know; seems to me like the surest way to being acquired is not thinking about being acquired.

Good read, though; really got me thinking. A lot of the ideas are similar to those presented in 37signals’ new book on building web apps.

but still, I’d like to think that someone building a web app just for the reason of getting acquired is a little silly; I almost want to say that there is a better chance of it happening if they’d just pretend like they would never get acquired, and instead just made the app better (simpler, in this case) for its own sake

The 5-dollar-idea applies to more than start-ups … take writing for example. Write up a zippy little article (maybe 1500 words or so) that touches on both current hot topics and making money, keep it light, fast paced, with an even mix of humor and perceived wisdom. Then wait for the O’Reilly, Pragmatic Publishers, or Manning book-options (buy-out) to roll in.

Phil – I didn’t mean to say that people need to think about being acquired. I actually advocate the opposite. Go out and build it, and do a good job. If it’s a cool idea to you, and you think others, give it a shot. Web apps are pretty damn low risk for the young ones.

[...] Mark Chang has a great post called The Five Buck Idea. He offers an easy-to-follow guide on creating a successful startup with a five buck idea. That’s right, startups don’t need to bring about world peace or feed the millions of starving children around the globe. [...]

[...] I think recently launched web start-up We Found This Key is probably the best of breed when it comes to new Web2.0 companies. Everything about the site, from the clean design to the clever user interface to the decision to skip Beta and go straight to launch speaks to a clear methodology and single-mindedness you don’t often see. So many Web2.0 companies these days take a Five Buck Idea and race for beta like it’s going out of style. Usually they launch this idea, find out that people are using it for something totally different than they expected and have to adapt. The best companies roll with it and respond to their users wants. The worst try to force the users into only doing what the business plan says users are supposed to do. WFTK was clearly designed to be as extensible as possible. It doesn’t lock the user into ANY sort of experience or interface, instead allowing them to use the site however they want. It only asks a question. [...]

[...] Mark Chang writes about the five buck idea: That’s right. You, too, can have a startup. All you need is a five buck idea. And then all that glamour can be yours. So, how do you usher in the age of sex, drugs, and rock and roll? Read on. [...]

[...] Zach – RandomNoise – You might have seen this site recently when Mark’s article onThe Five Buck Idea got Reddited/Del.icio.us’d. Mark’s stuff is really well written and pretty insightful, and its fun to flesh out ideas with him during a research meeting and then see it get posted a few days later. Check out some of the other stuff he’s written for some other quasi-cyncial views on Web2.0, Computing and the slackers he has for research assistants (*cough cough*). [...]

[...] This post is a very good read. It’s full of companies that make you go.. “hey! why didn’t I think of that?!” You aren’t looking to build a service that solves world hunger, or manages the schedules of entire companies, or does anything really that complicated sounding. You want something simple, almost to the point of ridiculousness, and heck, worth probably about five dollars. Extra points if someone under 20 scoffs and says, “Shit man, I can code that up in a weekend.” [...]

[...] The Edge website has had 50,000 total hits so far, although the actual number of daily visitors is around 100. As web sites go, this is a pretty small number (after all, my buddy Mark had 50,000 readers of a very interesting blog post he wrote in one weekend!) But, it’s important to remember that Edge does not get a lot of casual traffic to its site. Most visitors are either reading the blog (which turns out to be pretty good advertising) or have arrived after searching for plastics, microfluidics, embossing, or some other relevant technology. To date, a number of serious inquiries have come through the website (something I never expected to happen–in fact I’m pretty sure I posted here that I predicted that would never happen) and some have turned into paying clients. [...]

[...] In his blog, Jeremy Zawodny talks about the “Five Buck Idea.” I heard that somewhere else in a podcast I picked up from IT Conversations but I don’t remember who it was who said it, I could have been Paul Graham, Jason Fried or Zawodny himself. It came out in a line like “Everyone is looking for the Million Dollar Idea but you don’t need a Million Dollar Idea, you just need a five dollar idea and good execution.” [...]

This is a great post, and inspirational even when it has it’s tongue firmly in cheek. The truth is that everyone should have a five buck idea. You have to start somewhere so why not cut your teeth on an idea that is probably crazy but which will give you some pleasure and if it flops well, the lessons learned more than paid for the $10/month in hosting.

So I went ahead and tried it. The result, AutomaticRomantic.com romantic email reminders for the romance-impaired (like myself).

What a great way to learn about planning, building and promoting web applications. It’s shocking how low the barriers to entry have become.

[...] Quoting from The Five Buck Idea: “Face it, startups are cool” “You aren’t looking to build a service that solves world hunger, or manages the schedules of entire companies, or does anything really that complicated sounding. You want something simple, almost to the point of ridiculousness, and heck, worth probably about five dollars. Extra points if someone under 20 scoffs and says, ‘Shit man, I can code that up in a weekend.’” [...]